Carrot and Stick: How Reemployment Bonuses and Benefit Sanctions Affect Job Finding Rates

Bas van der Klaauw and Jan van Ours

No 5055, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: To increase their transition from welfare to work, benefit recipients in the municipality of Rotterdam were exposed to various financial incentives, including both carrots to sticks. Once their benefit spell exceeded one year, welfare recipients were entitled to a reemployment bonus if they found a job that lasted at least six months. However, they could also be punished for noncompliance with eligibility requirements and face a sanction, i.e. a temporary reducing of their benefits. In this paper we investigate how benefit sanctions and reemployment bonuses affect job finding rates of welfare recipients. We find that benefit sanctions were effective in bringing unemployed from welfare to work more quickly while reemployment bonuses were not.

Keywords: dynamic selection; welfare to work; financial incentives; timing-of-events (search for similar items in EconPapers)
JEL-codes: C21 C41 J64 (search for similar items in EconPapers)
Pages: 31 pages
Date: 2010-07
New Economics Papers: this item is included in nep-lab and nep-reg
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

Published - published in: Journal of Applied Econometrics, 2013, 28 (2), 275–296

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Related works:
Working Paper: Carrot and Stick: How Reemployment Bonuses and Benefit Sanctions Affect Job Finding Rates (2010)
Working Paper: Carrot and Stick: How Reemployment Bonuses and Benefit Sanctions affect Job Finding Rates (2010)
Working Paper: Carrot and Stick: How Reemployment Bonuses and Benefit Sanctions Affect Job Finding Rates (2010)
Working Paper: Carrot and Stick: How Reemployment Bonuses and Benefit Sanctions Affect Job Finding Rates (2010)
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